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Suncoast Pasco News

Act, Then Get Angry

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FROM A READER

Published: March 28, 2009

Editor:

Yes, the "Banking System Is Real Problem," as the headline to Rich Lowry's March 21 op-ed page column says. The bonuses are diverting attention from the necessity of saving banks, distasteful as that is to most Americans. It is the action that FDR took on his first day as president, an action that President Hoover had ignored for the final two years of his administration.

After the October 1929 stock market crash, the first big bank to fail was the Bank of the United States, in New York, in December 1930. The Hoover administration wrongly thought it could cordon it off from other banks. The panic spread as depositors ran to their banks to withdraw their savings.

After FDR declared his "bank holiday," he didn't allow banks to reopen until Congress established the FDIC to guarantee the deposits of ordinary depositors. By then 26 months had passed, essentially destroying the economy.

Only six months have passed since the current collapses and we have the FDIC to shore up confidence, so there is hope we can avoid another Depression. Congress should approve Obama's plan and express their anger against the banks later. The bonus fiasco will make it politically difficult for Congress to act, but the danger is doing too little, not too much.

John Chase
Palm Harbor

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